magic rat

Can someone riddle me this one?

First of all, when the economy started deteriorating a year ago in Europe and we were hopeful for trade deals as we went in the fiscal year, we expressed to you and the June analyst call, we began to put constraints on pilot hiring and we have not been hiring pilots for some time now. On an attrition basis, I believe, Don and Greg Hall, our Head of Air Operations told me that we will have a net reduction of several hundred pilots next year, just due to retirement and of course that corresponds to the flight hour reduction.

-John Smith, CEO Freight-side

C2078

The big difference is we are in a time of a booming economy, not a big economic downturn. If Fedex is having such issues during this booming time, when things go South......

PurpleToolBox

The USA is doing ok. Hence them saying domestic operations were sound. It is the international segment and the trade war and slow down in China and Europe that is kicking out butt.

The TNT integration, that insurance charge, and the dumping of Amazon along with a Cyber Monday in the next quarter all added up to a lackluster quarter.

C2078

Then why is UPS international segment doing mostly OK? 3Q YOY revenue increased slightly, margins improved and operating profit increased?

I take what Cramer has to say with a grain of salt, but, after multiple quarters blaming “everyone/everything” else, a fair question must be posed, is this simply an execution problem? A vision problem? A misguided strategy problem? Fedex has been blaming multiple factors/actors for it’s poor performance for quite some time now. Burying your head in the sand thinking you are the top dog only lasts so long. Selling your product at a premium in a commodity driven environment is very risky, although I will say Delta has gone all in selling their brand as “the” premium product and it seems to be working. Cargo/boxes/packages only care about one thing: being there when promised!!

Fedex for a long time discarded the e-commerce card as no big deal, now playing catch up, among other strategy problems.

Bottom line, Fedex sells a very similar product than every competitor. Telling your clients you are best simply doesn’t work. If the stock price gets low enough, Fedex employees might be looking at free Prime memberships!!

PurpleToolBox

Because they didn’t have the TNT albatross?

FedEx is on notice. If the next quarter doesn’t show some improvement then our leaders will have egg on their faces.

Our peak volumes are higher than forecasted. That is good news especially considering we dumped Amazon.

C2078

See, there it is again. Fedex has not tackled the TNT Albatross dead on since day one, this is what analysts are saying, excuse after excuse. The time has run out. You mention “the next quarter”, they have been saying “the next quarter” for at least a year. What most analysts are saying is that if Fedex had simply ripped off the TNT bandage from the beginning, they would not be in this situation today, they are saying Fedex has either lied all this time about the TNT integration or they are too incompetent to have understood the complexities of the acquisition.

PurpleToolBox

Mr. Smith said that TNT was a failing company that lied about their situation. Unfortunately they didn't know how bad it was until after they bought them.

Not making excuse, just relaying what I read somewhere.

sweetholyjesus

That's not quite how I read it. TNT was hit by a massive cyber attack. They would have failed if FedEx IT wasn't there to step in after the attack. FedEx is currently facing a class action suit, which claims it wasn't truthful to shareholders about the seriousness of the TNT cyber attack.

Cobia296

Its not just the TNT debacle that we have to worry about. Amazon is a much bigger threat. They are building out CVG to accomodate 100 airplanes with future plans of up to 200 more. Amazons stock price is tied directly to revenue. The more revenue the higher the stock price. What better way would there be to increase revenue then buying a bunch of airplanes and directly competing with FedEx and UPS. Some people think they could never get into the B2B side. I say why not ? Please someone tell me why they could'nt. Sadly FedEx, UPS and the USPS are the ones that helped them get started. Hopefully UPS will drop them before its too late. In the end I dont think the Amazon subcontracting model they use will work. Only time will tell.

Low Flyin

Buying a bunch of planes is one thing - staffing everything from pilots to MX is another. It’s already got a reputation for being a terrible place to work.